4 Indicted in Alleged $5 Million Theft of Union Funds

LOS ANGELES, June 15 —The Federal Organized Crime Strike Force said today that Joseph Hauser, a millionaire Beverly Hills insurance man, and three other men had been indicted by a Federal grand jury in connection with the alleged theft of $5.5 million from the health, welfare and pension funds of four labor unions.

However, the panel did not indict two other men who had figured in the investigation, former Attorney General Richard G.Kleindienst and Frank E.Fitzsimmons, president of the International Brotherhood of Teamsters.

The 10‐count indictment, returned in Phoenix, accused Mr.Hauser, 46 years old; Bernard Rubin, 57, of Miami Beach; George Ralph Herrera, 46, of Lakewood, Calif., and Brian Kavanagh, 40, of Chicago, of interstate transportation of stolen property, receiving and disposing of stolen property, conspiracy and operating a racketeer‐influenced and corrupt organization.

Bribes Also Charged

The men are accused of paying bribes and kickbacks to unnamed union officials to secure insurance contracts, of operating “numerous shell corporations” to conceal the alleged improprieties and of transporting money taken from the funds to Switzerland.

According to Kevin O'Malley, a member of the strike force who will prosecute the case in Phoenix, the four men were accused of taking $3.1 million from the teamsters’ Central States, Southeast and Southwest Health and Welfare Fund; $1 million from the Massachusetts Laborers Health and Welfare Fund; $725,000 from the Health and Welfare Fund of Local 395 cf the Arizona Laborers, Teamsters and Cement Masons, and $705,000 from the Pension Plan of the Southeast Florida Laborers District Council.

The role of Mr.Kleindienst and Mr. Fitzsimmons in the 1976 award of a large teornsters life insurance policy to a cornpany controlled by Mr.Hauser has been under scrutiny for more than a year as part of a Justice Department investigation of the teamsters’ union.

Both men were called before a Federal grand jury investigating Mr.Hauser in Los Angeles this spring and before a Senate subcommittee that is investigating labor racketeering.

Today's indictment mentioned both but did not cite them as defendants.However, it recounted details of their alleged participation in the case, which came to light in the Senate investigation.

The indictment charged that the fcur defendants had hired Mr.Kleindienst and two other men, I.Irving Davidson and Thomas Webb, to approach Mr.Fitzsimmons for the purpose of obtaining his help in securing the group life insurance policy, which involved coverage of $2.6 billion and annual premiums to the insurance company of $24 million.

And, the indictment continued, “it was further a part of said conspiracy that the defendants paid Richard G.Kleindienst a finder's fee of $250,000 for his assistance in approaching Mr.Fitzsimmons connection with the contract.” This sum allegedly came from a fund operated by the laborers’ union in Massachusetts.

The long indictment describes a chain of financial transactions that, it is contended, showed the illicit flow of money from the union funds through corporations to the defendants’ own accounts.

If convicted, the men will face jail sentences of 60 to 110 years and fines of $70,000 to $130,000.

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A version of this archives appears in print on June 16, 1978, on Page A14 of the New York edition with the headline: 4 Indicted in Alleged $5 Million Theft of Union Funds. Order Reprints|Today's Paper|Subscribe